Gujarat High Court
New India Assurance Co Ltd vs Kherbanuben Mohmedhusein Haji Pyarali on 26 July, 2018
Equivalent citations: AIRONLINE 2018 GUJ 87
Author: S.G. Shah
Bench: S.G. Shah
C/FA/4535/1999 CAV JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/FIRST APPEAL NO. 4535 of 1999
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE S.G. SHAH
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1 Whether Reporters of Local Papers may be allowed to
see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of the
judgment ?
4 Whether this case involves a substantial question of law
as to the interpretation of the Constitution of India or any
order made thereunder ?
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NEW INDIA ASSURANCE CO LTD
Versus
KHERBANUBEN MOHMEDHUSEIN HAJI PYARALI
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Appearance:
MS LILU K BHAYA(1705) for the PETITIONER(s) No. 1
MR GC MAZMUDAR(1193) for the RESPONDENT(s) No. 9
MR HG MAZMUDAR(1194) for the RESPONDENT(s) No. 9
MS MAMTA R VYAS(994) for the RESPONDENT(s) No. 1,4,5,6
RULE SERVED(64) for the RESPONDENT(s) No. 2,3
SERVED BY GOVERNMENT GAZETTE(76) for the RESPONDENT(s) No.
7,8
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CORAM: HONOURABLE MR.JUSTICE S.G. SHAH
Date : 26/07/2018
CAV JUDGMENT
1. Heard learned advocate Ms. Lilu K. Bhaya for the appellant - insurance company, learned advocate Ms. Mamta R. Vyas for Page 1 of 17 C/FA/4535/1999 CAV JUDGMENT respondent Nos.1, 4, 5 and 6 being original claimants, learned advocate Mr. H. G. Mazmudar for respondent No.9. Respondent Nos. 7 and 8 are though served, remain absent.
2. Perused the record. The appellant is insurance company of the vehicle involved in road accident. The appellant has challenged the judgment and award dated 21.04.1999 in Motor Accident Claim Petition No.736 of 1997 by the Motor Accident Claim Tribunal (Auxilliary), Bhavnagar. Such claim petition was preferred by legal heirs of Mohmmad Husen Haji Pyarali claiming an amount of Rs.4,50,000/- as compensation from the driver, owner and insurer of vehicle involved in the accident which took place on 15.02.1994 in sim of village Fedhra on Ahmedabad - Dhandhuka road. It is undisputed fact that on 15.02.1994, deceased - victim who was doing a business of Potato had been to Mahuva to purchase Potatoes and other vegetables in wholesale and was returning with vegetables purchased by him in bulk by loading the same in truck No. GJ 1 T 4285 as owner of such goods. When such truck was going towards Dhandhuka, near village Fedhra, one another truck No.GJ 1 V 5414 was coming from opposite directions and it is pleaded by the claimants being legal heirs and dependent of such victim that because of rash and negligent driving of both the vehicles by its driver, both the vehicles had collided resulting into serious fatal injuries to the victim. There is no dispute so far as details of incident, involvement of vehicles and its result are Page 2 of 17 C/FA/4535/1999 CAV JUDGMENT concerned. Therefore, except recalling above referred details in brief, there is no need to reproduce more factual details which is otherwise well described in impugned award and pleadings.
3. The main contentions of the appellant - insurance company of one of such vehicles being truck No. GJ 1 T 4285 to the effect that there would not be any effective insurance policy in favour of the owner of the vehicle and, therefore, insurance company cannot be held liable and responsible to indemnify the owner, so as to pay the amount of compensation to the claimants. By impugned judgment and award, the tribunal has awarded in all Rs.3,20,000/- with 12% interest to be paid by all the opponents jointly and severely and considering the involvement of both the vehicles and considering their clear negligence in incident, the tribunal had directed that insurance company of each vehicle has to bare the liability of award to the tune of Rs.1,60,000/-. Therefore, practically the liability of the present appellant is only 50% i.e. Rs.1,60,000/-. Similarly, for the claimants since there was no role of the victim in the incident, he being 3rd party to the incident, when this is a case of composite negligence between two tort-feesers, claimant is entitled to recover entire amount of compensation from either of the owner and its insurance company and, therefore, to some extent, this appeal and its determination would be more academic then effective when both the insurance company are nationalized insurance company being New India Assurance Company and Page 3 of 17 C/FA/4535/1999 CAV JUDGMENT United India Insurance Company for both the vehicles which are involved in the accident.
4. However, when the appellant - insurance company is keen to proceed further in such appeal, which is pending for almost two decades, the Court has no option but to deal with the rival submissions to arrive at proper conclusion on the issue raised by the appellant.
5. On perusal of available evidence on record, it becomes clear that when appellant has filed written submission on or about 7.2.1986 before the tribunal, except a general denial that the liability of the insurance company is limited as per the policy documents annexed, there is no specific pleadings which were ultimately taken as a ground for avoiding liability to pay compensation to the claimants. It is undisputed fact that claimants have as back as on 03.02.1998 filed on record of the tribunal, a documentary evidence to prove that the truck No. GJ 1 T 4285 was insured with the appellant. Such documents being receipt of accepting the premium of Rs.6596/- on 07.02.1994 disclosed the policy number and other relevant information. However, after production of such documents on record, appellant on 29.10.1998 came with one additional reply, which is filed at Exh. 78 with as many as 13 documents contending that owner of the vehicle No. GJ 1 T 4285 i.e. opponent No.2 M/s. Plasto Plastic Industry was earlier Page 4 of 17 C/FA/4535/1999 CAV JUDGMENT insured for the period from 08.02.1993 to 07.02.1994 and that on 07.02.1994 one Mahavir Road Lines has issued Cheque No.317235 of the Ahmedabad District Co - Operative Bank Ltd. for Rs.6896/- on behalf of M/s. Plasto Plastic Industry towards premium for insurance of vehicle under reference. It is admitted that on receipt of such cheque insurance company has issued receipt No.3689 on 07.02.1994 and such cheque was deposited in bank on 08.02.1994. However such cheque was dishonoured by the bank upon which it was issued and, therefore, it is contended that insurance company has not received the premium till 14.02.1994. whereas accident took place on 15.02.1994 without clarity about payment of premium to the insurance company and, therefore, though cheque was dishonoured on 14.02.1994, somehow it was presented again before the drawee bank and thereafter insurance company has received payment of such cheque only on 02.03.1994. Thus it is contented by the insurance company that when premium of insurance policy was not paid by the claimants and not received by the insurance company till 02.03.1994 though cheque was issued on 07.02.1994 and when accident has took-place on 15.02.1994, the insurance company cannot be held liable. It is further contended that a receiving claim and processing it at various level by the insurance company, as pointed one Mr. Kiran J. Mehta on 26.09.1995, who investigated into the payment details, during the investigation, it has been revealed that though cheque dated 07.02.1994 was dishonoured on 14.02.1994 and when accident has Page 5 of 17 C/FA/4535/1999 CAV JUDGMENT took-place on 15.02.1994, on 16.02.1994, account holder has deposited the amount which was short from the amount of cheque i.e. Rs.5900/- in the account of Mahavir Road Lines and, thereafter, cheque was again presented for clearance on 15.02.1994 which was cleared on 17.02.1994 and its intimation was sent on 18.02.1994 to the bank of the insurance company and amount was credited in the account of insurance company only on 02.03.1994. To prove all such history, the appellant has produced in all 13 documents with list at Exh. 80 before the tribunal and examined as many as 4 witnesses. Therefore, we have to scrutinize such oral as well as documentary evidence to realize the correct position in given facts and circumstances, so as to appreciate that whether there is any substance in the appeal or not.
6. At Exh. 85, appellant has examined one Rajeshbhai Shah as OW No.1. The witness was serving as a branch manager in the Kalol branch of the appellant at the relevant time i.e. in the month of February 1994. In his lengthy deposition, he has explained that how insurance is being accepted by the insurance company. However, at present we are not concerned with the procedural part or the manner in which insurance company is dealing with while accepting the proposal of insurance. However, witness has produced on record certain documents and, therefore, his deposition is to be appreciated with reference to such documents only. At Exh. 86 witness has produced the same receipt No.638198 Page 6 of 17 C/FA/4535/1999 CAV JUDGMENT dated 07.02.1994. Copy of which is produced by the claimant at mark 33/1. Therefore, now there is no dispute that such receipt was issued by insurance company disclosing the vehicle number so also the policy number. At Exh. 87, witness has produced only photocopy of relevant pages of cash income-cum- pay in slip register of the appellant company contending that such page is containing the details of the date 07.02.1994 and it does not disclose the premium for which vehicle or receipt under reference at Exh. 86 is concerned.
6.1 Unfortunately appellant has failed to realize that there is no dispute so far as existence of Exh. 86 is concerned, when they produce it but Exh. 87 is not only irrelevant but incomplete document, in as much as, it is few pages of cash-cum-pay in slip register of the company which did not confirm that these are the only pages for the date under reference and that when amount is paid by cheque, practically entry for such transaction would certainly not be reflected in cash income-cum-pay in slip register, though several cheques were disclosed in such register. On the contrary entry No.48 is confirming that insurance company has received the cheque at Exh. 86. Therefore, both two documents did not prove anything in favour of the appellant except confirming that insurance company was in receipt of cheque for which they have issued receipt as per Exh. 86. At Exh. 88 witness has produced a statement said to be received from the bank record. Page 7 of 17 C/FA/4535/1999 CAV JUDGMENT Similarly few more statements and other documents are produced at Exh. 88 and 90. But none of such documents prove anything in favour of the appellant - insurance company.
6.2 Similarly communication in the form of Exh. 91, 92, 93, 94 and 95 between two banks regarding cheque under reference also does not prove anything in favour of the appellant - insurance company, except the factual details disclosed in such documents, whereas at Exh. 91 there is insurance policy issued on 21.03.1994 in favour of the owner of the vehicle disclosing the period of insurance between 08.02.1994 to 07.02.1995. Therefore, when insurance policy is already issued on 21.03.1994 based upon the cheque under reference and receipt of cheque of such amount, even if accident taken place on 15.02.1994, the insurance company cannot exonerate its own liability contending that premium was received only on 02.03.1994 when accident was taken place on 15.02.1994. It seems that there may be some issue with the insurance company and its banker and/or between two banks regarding clearance of such cheque and forwarding its intimation to all concerned. But for such irregularity in case like present one, victim who is third party and thereby who has no role in such irregularity is certainly entitled to recover the amount of compensation from such insurance company, when it is clear that insurance company has never cancel the policy either before the accident or even thereafter but issued same only on 21.03.1994 i.e. Page 8 of 17 C/FA/4535/1999 CAV JUDGMENT after the accident and that cheque for premium and its receipt are dated 07.02.1994, whereas accident took place only on 15.02.1994.
7. Therefore, insurance company is liable to indemnify the owner irrespective of their internal difficulty in getting the amount of premium en-cashed either at the earliest or not in time and in not cancelling the insurance policy at the relevant time.
8. The communication at Exh. 96 is to some extent surprising, when divisional office of the appellant company has communicated both its consultant and the vehicle owner that claim of the vehicles under reference has been considered in total loss on settlement basis and, therefore, company is processing the file accordingly, taking into account missing part and substandard in travelling in the vehicle. Thereby probably insurance company has already paid the total loss for own damage claim of the vehicle deducting 25% for non authorised passenger so far as damage to the vehicle is concerned. The letter at Exh. 92 also confirms that such claim is settled in Rs.2,02,525/-. If it is so there is no reason for which insurance company should deny to pay the amount of compensation awarded by the tribunal to third party.
9. OW No.2 Bipinbhai at Exh. 101 is agent of drawee ADC bank. He has also simply narrated the factual details that till 16.02.1994 there was only balance of Rs.1242/- and on 16.02.1994 cash amount of Rs.5900/- was deposited. He also confirms that cheque Page 9 of 17 C/FA/4535/1999 CAV JUDGMENT in question dishonoured for want of sufficient funds in the account and when it was again presented for clearance it was cleared on 18.02.1994. He produced relevant copies of bank register to prove such transactions which is not in dispute.
10. OW No.4 Arunkumar at Exh. 105 is officer of the appellants's banker being Central Bank of India. He has also narrated the same story about the activities undertaken between two banks for clearance of cheque under reference and produced relevant documents to show that how cheques are dealing with between two banks.
11. However, none of these witnesses can prove anything which confirm that insurance company has cancelled the policy before the accident so as to exonerate its liability to pay compensation.
12. Thereby in nutshell, the fact is quite clear that irrespective of any irregularity either between insurance company, appellant and its banker or between the bank of the insured and insurer, both in handling the cheque and getting it encash in the hands of appellant company, the fact remains that on acceptance of cheque, the insurance company has issued proper receipt disclosing the policy number and after accepting the amount of cheque towards premium for which insurance of the vehicle under reference even issued policy on 21.03.1993 i.e. almost after three weeks from the Page 10 of 17 C/FA/4535/1999 CAV JUDGMENT date of getting the amount of cheque of premium on 02.03.1994. But in any case, there was no cancellation of policy by the insurance company before the actual incident which took place on 15.02.1994. On the contrary insurance company has infact settled the own damage claim of the owner by reducing the damages i.e. claim amount for total loss to the tune of 25% as non standard claim. Thus if insurance company has paid damages of the vehicle even as non standard claim, there is no reason for the insurance company to deny and agitate the issue regarding its liability to pay compensation to the victims of the road accident.
13. Thereby, though facts and circumstances are very much clear, as discussed herein above, whereby the fact remains that the insurance company has accepted the cheque on 07.02.1994 for covering the risk between 08.02.1994 till 07.02.1995, but before cheque was actually encashed by the insurance company, accident has taken place on 15.02.1994. However, even after accident, insurance company has not only accepted the premium, but also issued the policy and, therefore, now insurance company cannot be exonerated from its liability to pay compensation more particularly to third party victims and precisely when insurance company has already paid damages of the vehicle to its owner insured as non standard claim.
14. Thereby though factual details are quite clear against appellant, unfortunately appellant has came forward with few Page 11 of 17 C/FA/4535/1999 CAV JUDGMENT decisions of the Honourable Supreme Court of India. But without appreciating the fact that the overall outcome of all the decisions on the subject by different Courts and more particularly decision by the Honourable Supreme Court, the settled legal position is quite clear that when there is no intimation regarding cancellation of policy on dishonour of chque by the insurance company, and when there is no disclosure of insurance company, it cannot be exonerated from its liability to pay compensation to the third party claimants.
15. The appellant is relying upon the decision of the Honourable Supreme Court in case of Deddappa & Ors. vs. Branch Manager, National Insurance Co. Ltd. reported in 2008 (2) GLR 1774 (SC), wherein facts are altogether different, in as much as, in such reported case, cheque was issued on 15.10.1997 for the period between 17.10.1997 to 16.10.1998 but on receipt of cheque on 21.10.1997, the insurance company has not only cancelled the policy of insurance but communicated such fact to the owner of the vehicle and intimation on or about 16.11.1997 to RTO concerned. Thereafter accident has taken place on 06.02.1998 and, therefore, the Honourable Supreme Court has held that when intimation regarding cancellation of policy has been conveyed in November and when accident has taken place three months thereafter and if the vehicle owner has not bothered to pay the premium in between to confirm the validity of insurance policy, the insurance company Page 12 of 17 C/FA/4535/1999 CAV JUDGMENT cannot be held liable. Therefore, such judgment would not help the appellant to exonerate its liability.
16. It is unfortunate that nationalized insurance company are increasing the litigations by filing such frivolous appeals and relying upon the decisions, which are either not relevant or distinguished from the facts on hand. Time has came before the Court to direct the concern litigant to file an affidavit stating that they have checked all the judgments, on such issue and that there is no other judgment by the competent Court on the issue so as to arrive at any such different conclusion.
17. It would be relevant to recollect the following decisions of the Honourable Supreme Court on such subject so as to realize the correct legal proposition.
(1) (2008) 3 SCC 133 between National Insurance Co. Ltd.
vs. Abhaysing Pratapsing Waghela, wherein the Honourable Supreme Court has, even after referring the decision of Dedappa (supra) has confirmed and held that when cover note was issued prior to date of accident i.e. on the date of cheque, the date when cheque was issued to the insurer, though cheque issued towards payment of premium was dishonoured, in absence of cancellation of policy on dishonouring of cheque, the liability of insurance company will remain in force till policy was cancelled and thereby it Page 13 of 17 C/FA/4535/1999 CAV JUDGMENT was held that appellant insurance company cannot avoid its liability.
(2) (2008) 10 SCC 404 between United India Insurance Co.
Ltd. vs. Manubhai Dharasinhbhai Gajera, wherein though dispute is with reference to mediclaim policy, the discussion and observation of the Honourable Supreme Court with reference to renewal of insurance policy is material, when it is observed and held that when policy contemplates terms for renewal, subject of course to payment of requisite premium, the same cannot be placed on a par with a case of first contract. Therefore, when insurance policy of the vehicle which is otherwise hypotheticated with the bank, the principal laiddown in such judgment would apply whether it is policy of vehicle or medi claim policy.
(3) (2000) 3 SCC 195 between New India Assurance Co. Ltd. vs. Rula, wherein also the Honourable Supreme Court has held that subsequent cancellation of the insurance policy on the ground that cheque of premium was dishonoured, would not affect the rights of third party which had accrued on the issuance of policy on the date of which accident had took-place.
(4) (2012) 5 SCC 234 between United India Insurance Co. Ltd. vs. Laxmamma, wherein after distinguishing decision in case of National Insurance Co. Ltd. vs. Seema Malhotra Page 14 of 17 C/FA/4535/1999 CAV JUDGMENT reported in (2001) 3 SCC 151 so also the decision in case of Deddappa (Supra) and relying upon the decision in case of Oriental Insurance Co. Ltd. vs. Inderjit Kaur reported in (1998) 1 SCC 371 so also case of Rula (supra), the Honourable Supreme Court has again reconfirmed that if cancellation of policy has been done by the insurer after the accident, the insurer became liable to satisfy the award fo compensation passed in favour of the claimants. (5)Whereas the extreme case admitted even by insurance company is reported in 2010 (15) SCC 141 between Oriental Insurance Co. Ltd. vs. Dharam Chand, when though cheque was issued on 07.05.1998 at 4:00 p.m. and accident has occurred at 8:30 p.m. on 07.05.1998, the insurance company has fairly admitted before the Court that insurance commenced from the date and time of payment of premium for fixing the liability of the insurance company.
18. Learned advocate Ms. Vyas for the original claimant is relying upon the decision of the co-ordinate bench of this High Court in case of National Insurance Company vs. Bachubhai Chandubhai Vasava reported in 2010 (1) GLR 49 wherein in similar facts when cheque for premium was returned by the bank in absence of cancellation of policy, the insurance company was held liable.
Page 15 of 17 C/FA/4535/1999 CAV JUDGMENT
19. Therefore, in present case, when there is no evidence on record to confirm that insurance company has at any point of time cancelled the insurance policy and intimated such cancellation to the insured as well as RTO it cannot be exonerated to pay compensation to the third party. However, considering the typical facts available on record, if at all there is any issue, practically it is between insurance company, the appellant, its banker and the bank upon which cheque was issued by the insurer and not between the insurer and insured.
20. Therefore, if so advised, the appellant may initiate appropriate proceedings against any of them. In that case, the competent court would decide that who is at fault and thereby who can be blamed and made responsible to compassionate the insurance company for its liability. Since such issue can be decided in such separate litigation between concerned parties though it was argued before me about activities of the banks by the appellant, I have restrained myself discussion or deciding on any such issue which may be subject matter of any such litigation wherein all the parties are entitled to lead evidence to prove their case.
21. Thereby, there is no substance in the appeal and it needs to be dismissed. However, it is made clear that insurance company may initiate appropriate proceedings against appropriate party and Page 16 of 17 C/FA/4535/1999 CAV JUDGMENT if at all appellant succeeds, it may recover the amount paid by it to the claimants from such litigant being either of the bank or even insured - owner of the vehicle in question.
22. Thereby, appeal stands dismissed with no order as to costs. Interim relief if any granted earlier shall stand vacated. Record and Proceedings be sent back to the trial Court forthwith.
(S.G. SHAH, J) DRASHTI K. SHUKLA Page 17 of 17